Wage garnishment is usually a debtor’s worst fear. It lets a creditor or debt collector take payments directly from your paycheck before you ever receive it. Once a creditor has the permission to garnish your wages, you no longer have any say in paying them or not paying them. After a creditor starts garnishing your wages, it could be hard to stop the garnishment unless you can pay off the debt or prove that the garnishment isn’t legal.
How Garnishment Happens
A wage garnishment shouldn’t come as a surprise. Creditors have to go through several legal steps before they can start garnishing your wages and you should know about these steps. First, they need to sue you and win a lawsuit judgment against you. You’ll be served with a notice of the lawsuit and given the opportunity to respond before the suit goes to court. You can also show up in court and defend the debt, for example, by proving that the account is beyond the statute of limitations.
If the creditor does win the lawsuit and gets a judgment, they won’t automatically get a wage garnishment. Before that, you’ll be given the opportunity to pay up. But if you’re not paying the judgment on your own, the creditor can ask the court for permission to garnish your wages. Subject to your particular jurisdiction, you’ll usually be sent a notice 30 days before the garnishment starts. During that period of time, you can strike a deal with the creditor. Otherwise, the garnishment will proceed.
As you can tell, you have several opportunities to do something about a debt before it gets garnished from your wages. However, some types of garnishments you may not be able to stop. This includes child support orders, court-ordered alimony, or Chapter 13 bankruptcy payments.
How Much Can Be Garnished
Only a certain amount of your wages can be garnished. Subject to your particular jurisdiction, the amount is generally either 25% of your disposable income or $217.50, whichever is less, except for child support where the typical maximum garnishment is 60%. For calculating your maximum wage garnishment amount, your disposable income is generally your income after legally required deductions like taxes and social security.
By law, your employer can’t fire you for having your wages garnished for just one debt. However, subject to your particular jurisdiction, if you have multiple debts being garnished from your wages, your employer could decide to let you go. If you want to keep your job, it’s advisable to take care of your debts before they go to court.
Settling Before Garnishment
The best time to settle a debt is typically before it’s garnished from your wages. Once the garnishment starts, the creditor may not be interested in a settlement because they’re getting regular payments through your paycheck. Instead, contact your creditor about a settlement when you’re served with the lawsuit order. Let them know that you’d rather keep it from going to court and that you’re willing to make a settlement payment to end the process.
Note that certain states prohibit wage garnishment on creditor debts such as North and South Carolina, Pennsylvania, and Texas.